Q1 2023 Evercore Inc. Earnings Call
Okay.
Good morning, and welcome to the Evercore first quarter 2023 earnings Conference call.
Today's call is scheduled to last about one hour, including remarks by Evercore management and the question and answer session.
In order to ask a question. Please press the star key followed by the number one on your Touchtone phone at any time.
I will now turn the call over to Katie Haber, managing director of Investor Relations and ESG at Evercore. Please go ahead.
Thank you Chelsea good morning, and thank you for joining us today for Evercore first quarter 2023 financial results Conference call I'm, Katy Haver Evercore as head of Investor Relations and ESG.
Joining me on the call today is John Weinberg, our chairman and CEO and Tim on our CFO . After our prepared remarks, we will open up the call for questions earlier.
Earlier today, we issued a press release announcing Evercore first quarter 2023 financial results. Our discussion of our results today is complementary to the press release, which is available on our website at Evercore Dot com.
Conference call is being webcast live in the for investors section of our website and an archive of it will be available for 30 days beginning approximately one hour. After the conclusion of this conference call during.
During the course of this call we may make a number of forward looking statements any forward looking statements that we make are subject to various risks and uncertainties and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. These factors include but aren't but are not limited to those discussed in everquest filings with the SEC, including our.
Annual report on Form 10-K quarterly reports on Form 10-Q, and current reports on form 8-K, I want to remind you that the company assumes no duty to update any forward looking statements.
In our presentation today, unless otherwise indicated we will be discussing adjusted financial measures, which are non-GAAP measures that we believe are meaningful when evaluating the company's performance for detailed disclosures on these measures and the GAAP reconciliation you should refer to the financial data contained within our press release, which is posted on our website. We continue to believe.
It is important to evaluate everquest performance on an annual basis as we have noted previously our results for any particular quarter are influenced by the timing of transaction closings.
I'll now turn the call over to John .
Thank you Katie and good morning, everyone before I review the quarter I want to start off by addressing the environment I've been in this business for many years and it is clear he will always be cyclical.
Historically evercore has embraced all cycles and use each part of the cycle to build and strengthen our firm by expanding our client connectivity and products and sector capabilities and we will aspire to do so again in this environment.
In this current cycle, we also see great opportunity to as extraordinary talents are firm, which will further enhance our franchise.
We believe we are well positioned regardless of the macroeconomic landscape and have maintained an all weather balance sheet. We believe we will emerge from this downturn in a stronger position as we have done in every other cycle.
Continued volatility and uncertainty in the markets have resulted in a challenging first quarter for both the market and for Evercore.
Third our bankers and teams are increasingly active as promising client dialogues continue to build momentum in CEO confidence level.
Gun to rise off of recent lows.
In the quarter Evercore achieved $578 million and adjusted net revenues $93 million and adjusted net income and $2 16, and adjusted earnings per share.
Our adjusted net revenues and EPS were down, 21% and 43% respectively compared to last year's record first quarter in.
In the first part of the quarter Green shoots have begun to emerge. However in early March with the banking system disruption volatility returned in confidence levels shifts slower.
As challenging macro and geopolitical risks remain in force Cup.
Coupled with diminished access to the M&A markets Global announced M&A transactions greater than 100 in the first quarter were down 43% and 44% on a dollar a number of transactions basis basis reflective.
Respectively versus a year ago.
Our backlogs remain strong we are we continue to note the execution risks remain.
As transaction processes.
Closing timelines continued to be elongated.
And while the outlook for global economies and market conditions will continue to influence the timing of deal activity. Our teams continue to be fully engaged in consequential discussions with management teams and boards as companies continue to prepare for a turn in the market.
A recovery in the market will be led by macroeconomic clarity increasing confidence levels and an improvement in the financing market.
As I mentioned, we are seeing significant opportunities to recruit high quality talent in many areas of our strategic focus.
So far in 2023, we've welcomed two new Smbs, one and our private capital advisory business and another in our technology practice.
Are there more another advisory SMT is joining the firm later this week and in our European equity capital markets business and in one other is committed to join our technology group later this year.
Additionally.
Our newly promoted Smbs are off to a strong start.
Importantly, as we move forward, we will continue to focus on actively managing our expense base, while executing on our future growth plan.
Yeah.
Let me give a brief rundown of our businesses.
Global Advisory M&A activity levels were slower than a year ago and represented the weakest first quarter for industry wide M&A volumes since 2014.
That said, we continue to be involved in take private activity, particularly with the tech sector as sponsors are slowly starting to become more active we are making real progress with this client base as we have significantly increased our efforts in traditional sponsor coverage over the last year as well as continuing to invest in our <unk>.
Private capital businesses.
Our advisory team in Europe had another strong quarter and we continue to build our pipeline in the region.
Our leading strategic defense and shelter at shareholder Advisory business continues to be strong.
Activist campaigns remain at an elevated pace.
In restructuring, where we have one of the most active groups in the industry. Our activity levels are high and gaining momentum we are starting to see the implications of rising interest rates and default rates, which began a year ago.
In addition, the <unk>.
Tightening of credit markets has led to an uptick in traditional restructuring and liability management activities.
Difficult near term maturity walls in 2024, and 2026 may serve as catalysts for continued activity in the coming months.
Our private capital advisory and fundraising businesses saw strong client dialogues and activity in the quarter, albeit at lower levels from peaks in 2021.
Fundraising environment across all fund sizes have started to see marginal improvements relative to 2022.
The underwriting business continues to be impacted by broad market and macroeconomic uncertainty. However, we acted as a book runner in 11 of our 12 equity and equity related offerings in the quarter, highlighting our progress in equity capital markets.
Fact, we were involved as a book runner in two of the large in the two largest follow on of the quarter.
In our equities business, we continue to be a thought leader across both macro and fundamental research, helping our clients navigate recent market uncertainty.
Lastly in wealth management, our long term performance and client retention have remained strong.
Before I turn the call over to Tim to review, our financial results and other financial matters I want to briefly discuss our capital return strategy.
We remain committed to our goal of returning excess cash not invested in the business to shareholders in the form of dividends and share repurchases over time.
Our board declared a dividend of <unk> 76 cents a share an increase of 6% from the prior dividend declared.
Looking ahead, our uncertain, while uncertainty continues to be a constant and to have an impact on the business environment. We remain excited for the opportunities that lie ahead, we have a clear path for the firm going forward as I detailed in our fourth quarter earnings are consistent roadmap for growth, including Investor.
In talent and broadening and deepening our products and capabilities will allow us to continuously serve our clients and address their needs with that let me turn it over to Tim.
Thank you John .
Now about seven weeks into the new role and I'm pleased to be doing my first earnings call as CFO of Evercore.
Then in the industry since $90 86, and so for the past year, we've been in a challenging environment I know that eventually the cycle will turn it always does and I am encouraged about our medium and longer term outlook.
Evercore continues to implement this plan through the cycle.
And lastly, I look forward to meeting all of you our investors and sell side research analysts over the coming months.
For the first quarter of 2023 net revenues net income and EPS on a GAAP basis were 572 million $83 million and $2 <unk> per share respectively.
Comments from here will focus on non-GAAP metrics, which we believe are useful in evaluating our results.
Our standard GAAP reporting and a reconciliation of GAAP to adjusted results can be found in our press release, which is on our website.
Our first quarter adjusted net revenues of $578 million declined 21% versus the first quarter of 2022, which was a record first quarter for our firm.
First quarter adjusted operating income and adjusted net income of $115 million and 93 billion decrease in each case, 46% versus the first quarter of 2022.
Adjusted earnings per share of $2 16, SaaS decreased 43% versus the first quarter of last year.
Adjusted operating margin was 20% for the first quarter.
Lower than the first quarter 2022, adjusted operating margin of nearly 30%, but roughly in line with the first quarter adjusted operating margins in 2020, and 2019, plus 19% and 23% respectively.
Turning to the businesses first quarter adjusted advisory fees of $463 million declined 26% year over year compared to our record first quarter for advisory fees last year as well.
We all know we continue to operate in a challenging environment that has affected the capital raising and M&A markets by comparison, the dollar value and number of M&A announcements globally for transactions greater than 100 million, which as John cited earlier.
Down 43%, 44% respectively.
In accordance with the relevant accounting principles, our revenue for the first quarter of 2023 includes $18 million from transactions, which closed subsequent to March 31st or otherwise had contingent elements at March 31.
To compare we recognized 45 million in the first quarter of 2022.
And $116 million in the fourth quarter of 2022 in accordance with the same accounting principles.
First quarter underwriting revenues of $23 million were down 37% compared to the first quarter of 2022 is our underwriting business continues to be impacted by the broader market conditions, which reflects substantially lower than normal issuance levels.
Commissions and related revenue of $48 million in the first quarter was down 6% year over year, reflecting weaker trading volumes as a result of lower volatility.
First quarter, adjusted asset management and administration fees of $17 million decreased 10% year over year, primarily reflecting a decline in AUR driven by market depreciation.
First quarter adjusted other revenue net was a gain of approximately $27 million in part, reflecting the increase in value of our investment funds portfolio, which is used as a hedge for our D. C. P. Commitments. In addition, we generated interest income on our cash balance which benefited from short term.
Rates that have been higher this year than last.
Note that our cash balance was higher in January and February prior to bonus payments that occurred in March.
Turning to expenses the adjusted compensation ratio for the first quarter has 63, 5%.
Still early in the year in our first quarter compensation ratio reflects the best estimate for the full year based on our visibility at this point in time, which is limited with that in mind. It is important to note that we remain disciplined about continuing to implement our strategic plan throughout the cycle and to build on our strengths.
Our franchise.
As John mentioned, we believe the current recruiting environment presents an attractive opportunity for us.
That said, we are judiciously, managing our head count and using a disciplined approach to hire additional senior bankers, where we see hiring opportunities, which we believe can be especially impactful to our business.
As the year progresses, if we have greater than anticipated success in our hiring goals.
And or a market recovery takes longer we will adjust accordingly.
Our first quarter non compensation expenses were $95 million up 14% from a year ago, primarily driven by an increase in travel and related expenses, including both a higher number of trips and travel cost per trip as well as other operating expenses driven by an increase in bad debt expense.
<unk>, which are episodic in nature.
As we mentioned last quarter, we continue to expect non comps to increase in 2023, but at a lower rate than what we saw in 2022. This will be driven by continued normalization of travel practices. Some inflationary pressures across both travel intact as well as continued occupancy.
Related increases driven by the annualized nation of new space and contractual rent increases.
We remain focused on scrutinizing, our expenses and managing them tightly.
Our adjusted tax rate for the quarter was 15, 2% compared to 17.1% in the first quarter of last year. The tax rate for this quarter reflects a tax benefit associated with the vesting of stock compensation awards similar to a year ago, but had larger impact this quarter.
The net income was lower.
Turning to our balance sheet as of March 31, our cash and investment securities totaled nearly $1 $4 billion or excess cash as a percentage of our total cash and investment securities was in the mid 20% range, we have a durable and liquid balance sheet and a strong <unk>.
Cash position, which provides us with the ability to invest in our business throughout market cycles.
We regularly review our cash position with respect to the current business environment, and we prudently manage our cash position to ensure we have significant liquidity to enable us to implement our strategy, including hiring plans ability to capitalize on opportunities and ensuring all our stakeholders that we have been.
Actual stability.
In the first quarter, we returned a total of $327 $8 million to shareholders through dividends and repurchases of $2 2 million shares at an average price of $132 20, SaaS, we bought back stock in the quarter through net settlements and in the open market offsetting them.
Georgia as the dilution from the <unk> grants that were issued in the quarter and we plan to continue this strategy going forward, our first quarter adjusted diluted share count decreased by $2 5 million shares to $43 2 million from $45 7 million a year ago driven by the impact.
Are share repurchases, partially offset by the vesting of awards.
Well, we are currently in a challenging environment, we remain optimistic and energized about the prospects of the firm and I am excited in my new role as CFO to help along with John Our management team and our board of Directors chart. The course of this company as we continue to implement our <unk>.
Medium and long term plan and create value for our shareholders with that we'll now open the line for questions.
Yeah.
Thank you.
We will now conduct the question and answer portion of the conference.
Please limit to one question only.
Welcome to rejoin the queue for additional questions time permitting.
In order to ask a question. Please press the star key followed by one on your Touchtone phone.
Our first question will come from Devin Ryan with JMP Securities. Your line is open.
Terrific Good morning, John and Tim welcome to the call.
First question I guess my only question wanted to start on just restructuring.
And John you noted the restructuring team has been increasingly active and we're tracking a pretty healthy acceleration in mandates at evercore over the past nine months. So just maybe love to just parse through a little bit more commentary and how you would frame the current environment relative to maybe some other periods of stress and then looking ahead with this maturity wall coming.
Do you think the baseline of activity, it's going to be higher for the next few years irrespective of what happens on the credit backdrop.
Just want to get some more flavor for kind of what youre seeing there and how impactful this acceleration is.
Sure. Thanks, Kevin.
Yes.
We definitely see increasing activity in the restructuring area and as we've noted we've invested more there and our team continues to see momentum in their business and it continues to build.
As you mentioned rising rising rates difficult refinancing markets really and also default rates, which are beginning to come up and predicted to be even higher.
We are seeing restructurings more liability management assignments, we are seeing people begin really significant default preparation and we are actually finding.
Opportunities really across the board with companies both had larger corporate.
Situations, where we really have to help them do their liability management as well as portfolio companies.
The wall, that's coming of refinancings is going to actually really produce real activity levels.
We think that the.
Your prediction with where you get your if your question, which is will there be continued momentum in this business. We think there will be we're planning for that we think it's we think that the restructuring business has real legs to it.
Comparing it to OE.
In particular, I don't think it will actually be at the same level.
Of Oh, eight because I just believe its going to be more consistent but I also think that it's been a sustained longer I think it's going to be a sustained activity level going forward.
Okay. Thank you.
Thank you.
Our next question will come from Brennan Hawken with UBS. Your line is open.
Hi, Good morning, Thanks for taking my questions and Tim welcome to our quarterly dance good to have you.
So I'm curious.
About the comp ratio so Tim very clear current this this quarter's level as what you expect but could you could you maybe help us frame a little bit some of the commentary around both recruiting but also revenue expectation and environment last year, we learned that win.
Many firms, where we're sort of anticipating a recovery in the back half of the year and that resulted in some movement in the expectations of comp ratio what kind of it does that 63.5, assuming that the environment remains the same and then when you think about the recruiting pipeline does it assume that you're able to.
We continue to recruit in line with your expectations or if you does it not assume any recruiting how can you help us calibrate that recruiting comment please yeah sure.
And thank you Brendan.
Look the U S. You correctly hit us in your in your question that the context of the key drivers, which is it does reflect our best outlook for this year.
That's probably the single greatest factor that will determine where it actually ends up will be what happens to the revenue.
And so in response to the first aspect of your question.
It assumes an environment that's similar to what we're in today now you know there is there is seasonality in the sense that as we all know fourth quarter tends to be the biggest quarter.
The year for our people and our business.
But it's it's a it assumes that consistent environment with respect to that.
New partner higher Ed It reflects what we know today.
And so what were you know we don't do from an accounting standpoint, as you know gas about how many might join us in the fourth quarter or something like that but it reflects what we know today.
And then you know the last key variable is really.
Where the market is for investment banking compensation.
And you know and and that remains to be seen it's a long way away.
Great Thanks for that color.
Thank you.
Our next question will come from Ryan <unk> with Morgan Stanley . Your line is open.
Hey, good morning.
Good morning, Good morning, Ryan.
So I heard the comment around the March banking industry events fleshing out the pipeline how should we think about the size and timing of that impact and then south deal completion by few weeks from March to April or do you think that's a longer pushout from March to may be year end or sometime farther.
Really it is it's very much on a deal by deal basis, I think there if youre, if youre asking whether it takes longer to do transactions. The answer is most likely yes, because it's just taking longer to get the transactions through the pipeline and once.
We do get those it's taking longer to get them finished and closed so.
If you're asking the question will there will deals that are in the backlog take longer to get out.
Backlog going into the market I think the answer is also yes, I think it will take somewhat longer.
Because I think what's happening now is there is a there is a real.
Thought process going on which is when will the recovery happened and when will the markets become more active and buoyant and I think that.
Management teams as well as financial sponsors are really looking at that and as we've said.
What people are really looking for with respect to deals as clarity the confidence levels and really the financing markets being open and so that will actually impact how deals come out and what they do so I would say really its really across the board, but I think that what you should think about that one.
Deals get out they will take somewhat longer but I don't think it's going to be material, but there are many deals in backlog right now which are very strong very good deals and there's a lot of activity it really in.
In the backlog that we have and I think what we're what we're saying is that those may take a little longer to come out because.
Some of the decision makers are really waiting for there to be a turn in the market right and one thing I would add to that is is that with respect to financing transactions.
What you could see because there is some.
Pent up demand that we're seeing companies that would like to raise financing but are sitting on the sidelines.
Because of the challenging markets that when those financing windows open. It's possible you could see some attempt to rush through those windows and you could see you could see a flurry, but we don't know exactly when that will be.
Thank you.
Thank you.
Our next question will come from Steven <unk> with Wolfe Research. Your line is open.
Yeah.
Okay.
Hi, Good morning, John and welcome Sam.
Good morning, good morning.
So.
Well I wanted to ask a question on traditional M&A, I'm actually going to pivot and draw it down and expenses a little bit since it. Both of you indicated that you are focused on managing expenses alluded to a slower pace of non comp growth in the coming year. I was hoping you can just offer some additional specificity on the plant expense actions you're taking.
And are those whats driving the slower pace of non comp growth or are there incremental opportunities on the comp side that you're seeing as well.
Yeah sure I'll take that.
Let me just make a couple of observations and so one is we are up year over year from 85 million to about $95 million, although the $95 million that we booked this quarter is consistent with the prior three quarters and bear in mind that in an environment.
Which is significantly inflationary.
And so we think we have demonstrated some cost containment there the <unk> the <unk>.
Reason, we're at 95, though as opposed to.
A lower number like what you saw four quarters ago.
Travel and to me that's a good thing.
If we're going to spend money somewhere I'd like to spend a lot of travel because that means our bankers are out there.
Seeing clients and so.
We've seen that ramp up literally the number of trips has virtually double what it was a year ago.
And so I think what you've seen as you know it really an increase in travel and then what I would call pretty good cost containment with respect to the other expense lines. Now you know we're doing a little bit of an office move which is just required due to some <unk>.
Building complications where some of our employees. Currently are so you know that it'll be there and there is little we can do about that and then with respect to other types of contracts, whether it's information services or trying to reduce.
The cost per trip of our travel expenses you can rest assured we're working hard on that.
Great. Thanks for taking my question.
Thank you.
And as a reminder, that is star one to enter the queue.
Our next question will come from John Euro with Goldman Sachs. Your line is open.
Good morning, and thanks for taking my questions. So you've talked a little bit about the impact so far but what do you see as a longer term ramifications of the stress on the banking industry in terms of how it affects the the broader M&A business and then how would you contrast, the dialogues that you're having with large versus mid cap clients in between strategic and Spa.
Our clients at this point.
The long term impact of the bank disruption, it's really hard really to predict I think we're all hoping that the stabilization we're really allow.
The markets to really go back to being quite healthy again.
We actually anticipate that we think that the markets will return.
Right now what we're looking at in the medium term as we feel like that.
That things will begin to recover we don't exactly know when in the near term. We think that there will continue to be less clarity and therefore, we think it will take some time, but obviously things like interest rates inflation.
And really what is happening in the banking system will impact the timing of when things turn.
The one of the things I think that that.
I think everybody's watching right now is how are the banks feeling about lending because as deposits.
Somehow migrate out of banks some of the banks will actually become a little bit more conservative about lending and so that will impact if that does have an impact if that does have an effect. It will impact exactly how aggressive there is in terms of the bank markets generally, but we really anticipate.
And see that banks are really returning to their normal levels of take thinking about risks and taking risk and putting money out and doing leverage loans and we do see a beginning of a recovery in leveraged loans and also in the in the led general lending market.
So I think what we're looking at is that it's going to recover in terms of corporates versus sponsors. We think that sponsors are really looking really carefully at when they can go I think that sponsors have a lot of capital built up I think there's over three trillion dollars of dry powder in the equity side.
And I think that sponsors really want to get to work.
I think that that will be the print dependent somewhat on on <unk>.
Availability and interest rate levels for financing, because obviously that does impact their economics on the on the corporate side, we see that.
The companies really have been doing their homework and I can just tell you firsthand that there are a number of companies that I deal with where they really have done a tremendous amount of work getting ready for what they will perceive as a turn when they see that there is some confidence and the debt markets will be receptive.
And the bid asks or in a decent place I think youll see the big corporate start to come out.
Does <unk>.
Pretty rapidly because they've done a lot of homework and they've had lots of discussions and board level.
Discussions have taken place and so many companies know exactly what they want to do when they perceive a turn in the market and when they see receptivity.
That's very helpful. Thanks, so much.
Thank you.
Our next question will come from Matt <unk> with Keybanc your.
Your line is open.
Yeah.
Hi, good morning, guys.
Just had one for Tim Yes, given that this is your first full quarter as CFO I was just wondering if you could provide some insights into how youre thinking about the business now that you've had.
A full quarter under your belt it sounded like in your prepared remarks that your thoughts on excess cash levels were pretty consistent with prior disclosures, but kind of curious on your thoughts on capital preferences as it relates to buybacks and dividends, it's all yours and your general thoughts on comp and Youre recruiting philosophy would be great to hear your thoughts on these items, particularly in Brazil.
Any kind of differences in views versus your predecessor.
Yeah great.
And I'm happy to happy to touch on that a bit of a wide ranging question.
And I have limited time, but I'll hit on the highlights and so with.
With respect to capital return.
I think that that's an area where the firm has done pretty well over the last two years, we returned $1 $5 billion of capital. This year 328 million already in the first quarter.
And we've nearly repurchase shares equivalent to all of the Rs.
RF Skus, we issued as part of our compensation process. So I'm I'm pretty pleased with that and I I think my own personal philosophy is very consistent with what <unk> seen from the firm over the last several years I think.
With respect to the compensation ratio, we care a lot about that and we're managing head count as I said in my remarks Judiciously I think if you look at.
Where the head count stands today in terms of total employees relative to about three quarters ago or last summer you will see it's been about perfectly flat over that period of time.
And but what I don't want to do is be shortsighted and because.
Because we also care about implementing our medium and long term strategic plan and about the growth for the firm and therefore, we're out there working hard to continue to build and upgrade.
The team we have in place and so I don't like to focus on maximizing margins for any single quarter, but instead.
Try to build the firm over the medium and long term to create value for the shareholders.
Great. Thank you.
Thank you.
Our next question will come from Jim Mitchell with Seaport Global Your line is open.
Hey, good morning.
Another higher in Europe . This time on the ECM side. So can you kind of update us where you are in the build out process in Europe .
How you view the current environment and the opportunity set long term.
Sure Jim.
We continue to look at really strong growth opportunities in Europe , and as we've always said, we are taking opportunities to fill the white spaces and to fill out our product set.
As we see as we see opportunities in really the mitigating factor or that or the limiting factor is just the top talent and right now we're seeing some very good talent. So I could see us doing more hiring in Europe , because I believe that what really is has happened is that there are some very high level.
A plus talent available and so we are we're focusing on that will we will we will be higher more in Europe than we do other places no, but what we're doing is we're looking very carefully at the opportunities that we've identified.
Not only in terms of white space, but also product product needs and we are actually hiring and so we're going to continue to invest in Europe , and we are going to continue to do so in a way that really is.
Leveraging our opportunities and also very much trying to take advantage of what we see available in the market. So the bottomline is we.
We will continue to drive that you can anticipate that we will do that consistently the markets that we see and the opportunities in Europe are extensive and I think for us that build out is important.
Okay. Thanks.
Okay.
Thank you.
Our last question will come from Stephen Chabat with Wolfe Research. Your line is open.
Hi, Thanks for accommodating the follow up.
On the.
The other topic I wanted to just drill down on is the non M&A business as you've highlighted in the past that's composed at least a third of revenues over the past three years, just given less activity. Today I was hoping you can provide some perspective on how the mix compares to that one third baseline, especially in light of some of the positive commentary.
Harry you offered both on the restructuring side as well as in the private capital Advisory business given your more active on the secondary side, which appears to be more robust at the moment.
Yeah. Thanks.
And good question.
Look I think you know we've talked as you mentioned in the past about our non M&A businesses comprising at least a third of revenue and so what you would expect to see in a quarter. Like this is of course with M&A.
M&A, a little bit softer and restructuring gathering steam you would expect to see that our principal hold even more so than normal and that's the case.
And so restructuring.
Our restructuring is ramping up.
We've got a fantastic PCA business and that's why by the way that we've continued to invest in along with the other businesses you've seen in fact, one of our partner hires who's already joined Us Joy Genco.
As in that business and we're pleased to have her here.
And so what you would see us in an environment.
We're sell M&A sell sides for private equity sponsors is more challenging.
That.
Some of those sponsors might be looking at for example, continuation funds as an alternative.
We are continuing to see activity in that area.
And so we're.
We're pleased that.
Well, we think we've built which is what I would call an all weather firm.
As you know continuing to prove out in a market like this yes, I would just I would just add that on the private capital advisory businesses, they're seeing.
Good activity levels.
And I think that they continue to see real prospects as the year goes on they're less limited by the overall quote.
Public markets.
And really influenced by availability of capital and also the appetite for sponsors to do different things like raise money or to basically think about.
Bringing some of their they're there.
Their companies into a continuation process.
So I would just say that we.
We're seeing really strong activity levels in those areas and I think that there is a strong possibility that they will continue to build momentum through the year.
No that's great color, if I could squeeze in one more just on NII other fee surprise positively this quarter. The commentary in the release suggests that $17 million was driven by interest income I know youre, a nightmare perceive to be a very rate sensitive for five.
It appears that Thats at.
At least on that side of the ledger rates are providing a nice windfall given <unk> tends to be the low point for cash on the balance sheet.
I was hoping you can provide some context as to how you see that contribution evolving as the year progresses, especially if we're in a higher for longer interest rate environment right I think with respect to the other revenue.
Just as it was.
For the sake of everyone on the phone about Ah, let's assume about a third of that was due to the D. C. C. P hedge and then roughly two thirds to interest income and of course, the S&P was up about 7% in the first quarter and so that's what would account for that DCP game.
And then with respect to the cash there are really two components that resulted in a higher than normal number this quarter in one of those was of course, a short term interest rates, which are higher than they were a year ago.
Or in the let's call it the 4% area.
And then.
But we also.
During the first two months of the quarter had higher cash balances because that of course was <unk>.
Prior to paying the <unk>.
Bonuses yearend bonuses and so.
I'd be a little careful about Annualizing for example that number but I think I've given you enough enough guidance, where you can.
Build your own framework.
Couple of color Tim Thanks for taking my additional follow ups.
Sure.
Thank you.
And ladies and gentlemen, this does conclude todays evercore first quarter 2020 financial results conference call.
May now disconnect.
Yeah.
[music].
Hum.
Yeah.
[music].
Yeah.
[music].